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CONSULTATION PAPER ON THE REGULATORY FRAMEWORK FOR
PREFERENTIAL ISSUES AND QUALIFIED INSTITUTIONS PLACEMENTS
A. Objective
1. The objective of this consultation paper is to seek comments / views from public
on the proposed regulatory framework for preferential issues and qualified
institutions placements (QIPs) by an issuer listed on the recognized stock
exchanges in the IFSC.
B. Background
2. The IFSCA (Listing) Regulations, 2024 (“Listing Regulations”) provides the
regulatory framework for issue and listing of various financial products, including
specified securities, debt securities and other financial products on the recognised
stock exchanges in the international financial services centres (“IFSC”) in India.
3. Regulation 57 of the Listing Regulations inter alia provide an enabling framework
for specifying detailed norms by IFSCA for Preferential Issues and QIPs, as
follows:
“A Listed Entity may make rights issues, preferential issues or qualified
institutions placement of specified securities, subject to compliance with the
requirements that may be specified by the Authority.”
C. Relevant IOSCO Principles
4. The relevant IOSCO Principles relating to issuers are Principles 16 - 18 (mentioned
below). These Principles have been appropriately considered in the Listing
Regulations and the proposed framework for preferential issues and QIPs, to the
extent applicable.
Principle 16: There should be full, accurate and timely disclosure of financial
results, risk and other information which is material to investors’ decisions.
Principle 17: Holders of securities in a company should be treated in a fair and
equitable manner.
Principle 18: Accounting standards used by issuers to prepare financial statements
should be of a high and internationally acceptable quality.D. Standing Committee on Primary Markets
5. The draft regulatory framework for preferential issues and QIPs were deliberated
in the Standing Committee on Primary Markets (the Committee). The best
practices in India and other global markets have been considered during the
deliberations in the Committee. The draft regulatory framework for preferential
issues and QIPs is based on recommendations of the Committee.
E. Proposed framework
6. The salient features of the proposed framework for preferential issues and QIPs
are as under:
I. Key Definitions
i. Preferential Issue:
Preferential Issue means an issue of specified securities by a listed entity
to any select person or group of persons on a private placement basis in
accordance with this circular.
ii. QIPs
The definition of QIP has already been provided in regulation 3(1) (bb)
of the Listing Regulations:
“qualified institutions placement” means issue of specified securities to
qualified institutional buyers on a private placement basis and includes
an offer for sale of specified securities by the promoters or controlling
shareholders on a private placement basis.
As regards definition of qualified institutional buyers, the following
definition is proposed:
“qualified institutional buyer” means, -
a) a retail scheme or a non-retail scheme or a venture capital scheme,
by whatever name called, regulated by a regulator in India, IFSC or
Foreign Jurisdiction;
b) a public financial institution;
c) a bank;
d) a non-banking financial company regulated by a regulator in India,
IFSC or a Foreign Jurisdiction;e) a multilateral or bilateral development financial institution;
f) a sovereign wealth fund;
g) a state industrial development corporation;
h) an insurance company;
i) a provident fund;
j) an endowment fund;
k) a university fund;
l) a pension fund;
m) an accredited investor other than individual as specified under the
IFSCA (Fund Management) Regulations, 2025; or
n) any other entity as may be specified by the Authority from time to
time.
II. Relevant Date
The “Relevant Date” for Preferential Issues / QIPs shall be as under-
a. In case of a Preferential Issue, the date thirty days prior to the date
on which the meeting of shareholders is held to consider the
proposed Preferential Issue;
b. In case of a QIPs of equity shares, the date of the meeting in which
the board of directors of the issuer or the committee of directors duly
authorised by the board of directors of the issuer decides to open the
proposed issue; and
c. In case of a QIPs of eligible convertible securities, either the date of
the meeting in which the board of directors of the issuer or the
committee of directors duly authorised by the board of directors of the
issuer decides to open the issue of such convertible securities or the
date on which the holders of such convertible securities become
entitled to apply for the equity shares.
III. General Conditions for Preferential Issues and QIPs
i. A listed issuer making a Preferential Issue or a QIP of specified securities
shall ensure that:
a) all equity shares allotted by way of Preferential Issue or a QIP shall
be made fully paid up at the time of the allotment;b) approval of shareholders has been obtained by way of a special
resolution or such other resolution as may be applicable in the
jurisdiction of incorporation of the issuer;
c) the issuer has obtained an in-principle approval from the recognised
stock exchange(s) where its equity shares are listed.
IV. Tenure of convertible securities
i. The tenure of convertible securities shall be as under-
a) in case of Preferential Issue, eighteen months from the date of
allotment;
b) in case of QIP, sixty months from the date of allotment.
V. Additional requirements for Preferential Issues
Disclosures to shareholders
i. For Preferential Issue, in addition to the disclosure requirements in the
jurisdiction of incorporation, the following shall be disclosed in the
explanatory statement to the notice for the general meeting proposed for
passing the special resolution or such other resolution as may be
applicable in the jurisdiction of incorporation of the issuer for issuance of
capital:
a) objects of the issue along with deployment of funds to be raised;
b) intent of the promoters/controlling shareholders, directors or key
managerial personnel of the issuer to subscribe to the offer.
c) shareholding pattern of the issuer before and after the Preferential
Issue;
d) time frame within which the Preferential Issue shall be completed;
e) the identity of the ultimate beneficial owners of the shares proposed
to be allotted and/or who ultimately control the proposed allottees.f) the percentage of post Preferential Issue capital that may be held by
the allottee(s) and change in control, if any, in the issuer consequent
to the Preferential Issue;
g) Pricing of specified securities
Lock-up requirements in case of Preferential Issue
ii. The specified securities, allotted on a preferential basis to the promoters
and controlling shareholders, shall be locked-up for a period of six
months from the date of trading approval granted for the specified
securities.
VI. Additional requirements for QIPs
Appointment of lead managers
i. An issuer shall appoint one or more investment bankers, which are
registered with the Authority, as lead manager(s) to the issue.
Placement Document
ii. The QIPs shall be made on the basis of a preliminary placement
document and placement document which shall contain all material
information, including those specified in the jurisdiction in which the
issuer is incorporated and disclosures as specified in regulation 38 of the
Listing Regulations.
F. Regulatory Objective
7. The objective of this framework is to provide listed companies with a mechanism
for raising capital through a fast-track, cost-effective, and streamlined process,
simultaneously ensuring transparency, fair pricing, and protecting the interests of
shareholders.
G. Public Comments
8. Comments are invited from the public on the draft regulatory framework for
preferential issues and QIPs as enclosed at Annexure-I.9. Comments may be sent by email to Shri Shubham Goyal, Assistant General
Manager at goyal.shubham@ifsca.gov.in and/or Shri Hemant Verma, Manager
at verma.hemant56@ifsca.gov.in with a copy to Shri Arjun Prasad, General
Manager at arjun.pd@ifsca.gov.in with subject line “Comments on the regulatory
framework for the Preferential Issues and QIPs” latest by March 27, 2026.
10. The comments should be provided in the following format:
Name and Designation
Contact No. and Email
Address
Name of Organisation
S. Para Text of Comments/Suggestions/Suggested Detailed
No. No. the modifications Rationale
para
March 06, 2026
GandhinagarAnnexure-I
CIRCULAR
F. No. <Date>
To
All the investment bankers in the International Financial Services Centre (IFSC)
All the issuers listed on the recognised stock exchanges in the IFSC
All the recognised stock exchanges in the IFSC
Madam/Sir,
Subject: Framework for preferential issues and qualified institutions placement
under the IFSCA (Listing) Regulations, 2024
1. The International Financial Services Centres Authority (Listing) Regulations,
2024 (“Listing Regulations”) provide the regulatory framework for listing of
securities and other permitted financial products on the recognised stock
exchanges in the IFSC. Regulation 57 of the Listing Regulations enables the
listed entities on the Stock Exchanges in the IFSC to make preferential issues
or qualified institutions placement (QIP) subject to such requirements as may
be specified by the IFSCA (“the Authority”).
2. A listed entity shall raise capital through preferential issue and QIP in
accordance with the norms and requirements specified in the circular.
APPLICABILITY
3. This circular shall apply to listed entities with specified securities listed solely
on the recognised stock exchange(s) in the IFSC and shall not apply to issuers
with secondary listing in IFSC.
DEFINITIONS
4. In this circular, the term(s) defined herein shall bear the same meanings as
assigned to them as below:i. “Preferential issue” means an issue of specified securities by a listed entity
to any select person or group of persons on a private placement basis in
accordance with the requirements of this circular.
ii. As per regulation 3 (1) (bb) of the Listing Regulations, “qualified institutions
placement” means issue of specified securities to qualified institutional
buyers on a private placement basis and includes an offer for sale of
specified securities by the promoters or controlling shareholders on a
private placement basis. For the purpose of this circular, “qualified
institutional buyer” means, -
a) a retail scheme or a non-retail scheme or a venture capital scheme,
by whatever name called, regulated by a regulator in India, IFSC or
Foreign Jurisdiction;
b) a public financial institution;
c) a bank;
d) a non-banking financial company regulated by a regulator in India,
IFSC or a Foreign Jurisdiction;
e) a multilateral or bilateral development financial institution;
f) a sovereign wealth fund;
g) a state industrial development corporation;
h) an insurance company;
i) a provident fund;
j) an endowment fund;
k) a university fund;
l) a pension fund;
m) an accredited investor other than individual as specified under the
IFSCA (Fund Management) Regulations, 2025; or
n) any other entity as may be specified by the Authority from time to
time.
GENERAL CONDITIONS FOR PREFERENTIAL ISSUES AND QIPS
Eligibility Criteria
5. Preferential issue or QIP of specified securities shall not be made to any person
who has sold or transferred any equity shares of the issuer during the 30 trading
days preceding the relevant date.
For the purpose of this circular, “relevant date” meansi. In case of a preferential issue, the date thirty days prior to the date
on which the meeting of shareholders is held to consider the
proposed preferential issue;
ii. In case of a QIP of equity shares, the date of the meeting in which
the Board of Directors of the issuer or the Committee of Directors
duly authorised by the Board of Directors of the issuer decides to
open the proposed issue; and
iii. In case of a QIP of eligible convertible securities, either the date of
the meeting in which the Board of Directors of the issuer or the
Committee of Directors duly authorised by the Board of Directors of
the issuer decides to open the issue of such convertible securities or
the date on which the holders of such convertible securities become
entitled to apply for the equity shares.
Explanation: Where the relevant date falls on a weekend or a holiday, the day
preceding the weekend or the holiday will be reckoned to be the relevant date.
6. An issuer shall not be eligible to make a preferential issue or a QIP if it has any
outstanding dues to the Authority, the stock exchanges on which equity shares
are listed or the depository for the equity shares of the issuer. However, this
shall not be applicable in a case where such outstanding dues are the subject
matter of a pending appeal or proceeding(s) with the authority, the stock
exchanges or the depository, as the case may be.
Conditions for making preferential issues
7. A listed issuer making a preferential issue or a QIP of specified securities shall
ensure that:
i. all equity shares allotted by way of preferential issue or a QIP shall be made
fully paid up at the time of the allotment;
ii. approval of shareholders has been obtained by way of a special resolution
or such other resolution as may be applicable in the jurisdiction of
incorporation of the issuer;
iii. the issuer has obtained an in-principle approval from the recognised stock
exchange(s) where its equity shares are listed.Tenure of convertible securities
8. The tenure of the convertible securities of the issuer, shall not exceed
i. in case of preferential issue, eighteen months from the date of allotment;
ii. in case of QIP, sixty months from the date of allotment.
9. Upon exercise of the option by the allottee to convert the convertible securities
within the tenure specified in para 8 above, the issuer shall ensure that the
allotment of equity shares pursuant to exercise of the convertible securities is
completed within 15 days from the date of such exercise by the allottee.
Payment of Consideration
10. Full consideration of specified securities other than warrants, shall be paid by
the allottees at the time of allotment of such specified securities except in case
of shares issued for consideration other than cash.
11. In the case of warrants, an amount equivalent to at least twenty-five percent of
the consideration shall be paid against each warrant on the date of allotment of
warrants and the balance seventy-five percent of the consideration shall be paid
at the time of allotment of the equity shares pursuant to exercise of options
against each such warrant by the warrant holder.
Provided that in case the exercise price of the warrants is based on the formula,
at least twenty-five per cent. of the consideration amount calculated as per the
formula with conversion date being the relevant date shall be paid against each
warrant on the date of allotment of warrants and the balance consideration shall
be paid at the time of allotment of the equity shares pursuant to exercise of
options against each such warrant by the warrant holder.
12. In case the warrant holder does not exercise the option for equity shares
against any of the warrants held by the warrant holder, the consideration paid
in respect of such warrant in terms of para (11) above shall be forfeited by the
issuer.
13. The issuer shall ensure that the consideration of specified securities, if paid in
cash, shall be received from respective allottee's bank account and in the case
of joint holders, shall be received from the bank account of the person whose
name appears first in the application.ADDITIONAL REQUIREMENTS FOR PREFERENTIAL ISSUE
Disclosures to shareholders
14. In case of preferential issue, the issuer shall, in addition to the disclosures
required under the laws of the jurisdiction in which they incorporated, disclose
the following in the explanatory statement to the notice for the general meeting
proposed for passing the special resolution or such other resolution as may be
applicable in the jurisdiction of incorporation of the issuer for issuance of capital:
i. objects of the issue along with deployment of funds to be raised;
ii. intent of the promoters/controlling shareholders, directors or key
managerial personnel of the issuer to subscribe to the offer.
iii. shareholding pattern of the issuer before and after the preferential issue;
iv. time frame within which the preferential issue shall be completed;
v. the identity of the ultimate beneficial owners of the shares proposed to be
allotted and/or who ultimately control the proposed allottees.
Explanation: The definition of beneficial owner shall be same as specified
under the International Financial Services Centres Authority (Anti Money
Laundering, Counter-Terrorist Financing and Know Your Customer)
Guidelines, 2022.
vi. the percentage of post preferential issue capital that may be held by the
allottee(s) and change in control, if any, in the issuer consequent to the
preferential issue;
vii. Pricing of specified securities
Explanation: Pricing shall be determined pursuant to the valuation report
and the manner of arriving the price shall be disclosed in the explanatory
statement.
15. Specified securities may be issued on a preferential basis for consideration
other than cash.Provided that consideration other than cash shall comprise only swap of shares
pursuant to a valuation report and the manner in which swap ratio is calculated
should be disclosed as a part of the explanatory statement to the special
resolution or such other approval applicable to the issuer in the jurisdiction of
its incorporation.
Lock-up
16. The specified securities, allotted on a preferential basis to the promoters and
controlling shareholders, shall be locked-up for a period of six months from the
date of trading approval granted for the specified securities.
Allotment
17. Allotment pursuant to the special resolution or such other resolution as may be
applicable in the jurisdiction of incorporation of the issuer for issuance of capital
shall be completed within a period of thirty days from the date of passing of
such resolution.
Provided that, if any regulatory approval is required for such allotment, then the
allotment shall take place within the later of (a) thirty days from the date of
passing such resolution; or (b) thirty days from the date of receipt of the
regulatory approval.
ADDITIONAL REQUIREMENTS FOR QIPS
Appointment of lead manager
18. In case of QIPs, an issuer shall appoint one or more investment bankers, which
are registered with the Authority, as lead manager(s) to the issue.
Placement document
19. The lead manager(s) shall exercise due diligence and shall satisfy themselves
with all aspects of the Issue including the veracity and adequacy of disclosures
in the offer document.
20. The QIPs shall be made on the basis of a preliminary placement document and
placement document which shall contain all material information, includingthose specified in the jurisdiction in which the issuer is incorporated and
disclosures as specified in regulation 38 of the Listing Regulations.
21. The preliminary placement document and the placement document shall be
circulated only to select investors.
22. The preliminary placement document and the placement document shall be
placed on the websites of the relevant stock exchange(s) and of the issuer with
a disclaimer to the effect that it is in connection with a QIP and that no offer is
being made to the public or to any other category of investors.
Allotment
23. For a QIP, allotment pursuant to the special resolution or such other resolution
as may be applicable in the jurisdiction of incorporation of the issuer for
issuance of capital, shall be completed within a period of one year from the date
of passing of such resolution.
24. The circular is issued in exercise of powers conferred by section 12 of the
International Financial Services Centres Authority Act, 2019 read with
regulations 57 and 130 of the Listing Regulations.
A copy of the circular is available on the website at www.ifsca.gov.in.
Yours faithfully,
Arjun Prasad
General Manager
Division of Corporate Finance
Department of Capital Markets
Email: arjun.pd@ifsca.gov.in
Phone: +91 79 6180 9815